Question

Varun declared bankrupt owenrs20000 to us paid 40 paise a rupee

Answer 1

given that Varun can only pay 40paise for 1ruppee so 60 paise is bad debt

now 0.40x20000=8000

and 0.60x20000=12000

so the entry for the above is

cash a/c. Dr. 8000. -

bad debts a/c Dr. 12000. -

to owners a/c. - 20000